The Bangko Sentral ng Pilipinas (BSP) announced a reduction in both banks and non-banks’ reserve requirement ratios (RRR) to single-digit levels, effective from the end of June this year.
BSP Governor Felipe M. Medalla said the RRR cut would inject a substantial amount of fresh funds, ranging from P300 billion to P320 billion, into the financial system.
However, the BSP will counterbalance this infusion through various measures such as open market operations, including weekly term deposits and securities auctions, as well as the reverse repurchase facility.
In a separate statement, the BSP clarified that it has lowered the RRR by 250 basis points (bps) for big banks and non-bank financial institutions, 200 bps for digital banks, and 100 bps for thrift banks, rural banks, and cooperative banks.
By June 30, the RRR for universal and commercial banks, as well as non-banks with quasi-banking functions, will decrease to 9.5 percent from the previous 12 percent.
Digital banks will see their RRR reduced to six percent from eight percent while thrift banks will have a significantly reduced RRR of two percent, down from three percent, while rural and cooperative banks will only maintain an RRR of one percent.
These new ratios will be applicable to local currency deposits and deposit substitute liabilities of both banks and non-banks, the BSP said.
With this move, the BSP aims to bolster liquidity in the financial system and facilitate a more dynamic monetary environment while maintaining its commitment to stability and the overall effectiveness of monetary policy.
